Question: You are given the following partial information about a consumer's purchases. He consumes only two goods. Year 1 Year 2 Quantity Price Quantity Price Good


You are given the following partial information about a consumer's purchases. He consumes only two goods. Year 1 Year 2 Quantity Price Quantity Price Good 1 100 100 120 100 Good 2 100 100 x 80 Over what range (x) of quantities of good 2 consumed in year 2 would you conclude: 1. That this behavoiour is inconsistent (i.e.: in contradiction with WARP) 2. That the consumer's choice behaviour reveals that he prefers the consumption bundle in year 1 to that in year 2? (Assume that the weak axiom is satised.)
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To solve these questions we need to consider the Weak Axiom of Revealed Preference WARP and compare ... View full answer
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